Convert Sch C to S Corp

Forum|Forum|3 years ago
October 28, 2022
2 replies
4 views

I am wondering if it is possible to use the information within Turbo Tax to convert a FILED (1040 + Sch C) over to a (1040 + S Corp) for comparison purposes only in order to make a decision to change business entity from LLC to S Corp. Or will it be necessary to purchase new software, re-enter all the data and see where it come out with owing taxes? Seems like a lot of work. . . . hoping there is an easier way to find out "which is better for our tax situation - LLC or S Corp?"

thx

TurboTax Home & Biz Windows

Anonymous_

Level 15

In short, you will need to re-enter the information into the TurboTax Business product; there is no way to "convert" a Schedule C business (filed with a TurboTax individual tax preparation product) to an S corporation 1120-S return (which is prepared and filed using TurboTax Business).

You can, of course, re-enter the information from your Schedule C (and related worksheets) into the Business product but there is no easy method of actually converting that information.

I will page @Rick19744 for further input.

bendgirlAuthor

Level 2

thank you, appreciate it

bendgirlAuthor

Level 2

Be aware that if you convert to an S-Corp you will be required to pay yourself a reasonable salary and file quarterly/annual payroll tax reports for both the fed and state. You cannot evade FICA taxes but you can possibly reduce them. Before you make a decision be sure to consider all facets of this choice.

Yes, we would like to find out more about the reasonable salary along with distributions, thank you for you expertise on the question

Rick19744

Level 13

This forum isn't going to be able to provide much assistance, since your question relies on numerous facts and circumstances.

As has been stated, it's not as simple as just moving data from one software program to another.

There are many issues that need to be considered:

As has been noted, you will be required to file an additional tax return. Will this be something you can handle?
As has been noted, an S corporation will need to pay out a reasonable salary to the shareholder(s). This is also based on facts and circumstances. Are you able to handle the payroll filing requirements?
You will need to determine what your specific state requires for S corporations, such as, at a minimum, annual shareholder minutes for state purposes. You will need to follow-up with an attorney on this matter.
There are certain fringe benefits that become taxable for shareholder's of an S corporation.
To review just the tax impact, you can handle this in excel; depending on how comfortable you are with this program. Doing this will allow you to look at various "what if" scenarios.
Honestly, your best course of action would to visit with a tax professional where you can have a one on one and address the pros and cons.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

bendgirlAuthor

Level 2

Yes, we would like to find out more about the reasonable salary along with distributions, workmen comp opt-out of owner/employee situations . . . I like your suggestion of dumping the basic info into an excel for a start on the comparison, thank you for you expertise on the question, I think we will make an appointment with a CPA for further guidance on this decision, thanks again!